Correlation Between Brickworks and Lendlease
Can any of the company-specific risk be diversified away by investing in both Brickworks and Lendlease at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Brickworks and Lendlease into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brickworks and Lendlease Group, you can compare the effects of market volatilities on Brickworks and Lendlease and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Brickworks with a short position of Lendlease. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brickworks and Lendlease.
Diversification Opportunities for Brickworks and Lendlease
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Brickworks and Lendlease is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Brickworks and Lendlease Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lendlease Group and Brickworks is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Brickworks are associated (or correlated) with Lendlease. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lendlease Group has no effect on the direction of Brickworks i.e., Brickworks and Lendlease go up and down completely randomly.
Pair Corralation between Brickworks and Lendlease
Assuming the 90 days trading horizon Brickworks is expected to generate 0.83 times more return on investment than Lendlease. However, Brickworks is 1.21 times less risky than Lendlease. It trades about -0.01 of its potential returns per unit of risk. Lendlease Group is currently generating about -0.12 per unit of risk. If you would invest 2,618 in Brickworks on September 25, 2024 and sell it today you would lose (41.00) from holding Brickworks or give up 1.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Brickworks vs. Lendlease Group
Performance |
Timeline |
Brickworks |
Lendlease Group |
Brickworks and Lendlease Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Brickworks and Lendlease
The main advantage of trading using opposite Brickworks and Lendlease positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brickworks position performs unexpectedly, Lendlease can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Lendlease will offset losses from the drop in Lendlease's long position.Brickworks vs. Northern Star Resources | Brickworks vs. Evolution Mining | Brickworks vs. Bluescope Steel | Brickworks vs. Aneka Tambang Tbk |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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